New report suggests hiring increased last month: Oregon economic news

A private report released this morning suggests employers ramped up hiring in June, adding 176,000 jobs. Last month’s job growth could provide critical evidence whether the economy’s sluggish recovery has slowed to a halt or lost further ground.

Payroll firm ADP’s monthly employment report offers an early glimpse, because it is often released just days ahead of the federal government’s official jobs data.

The economy showed signs of marked recovery in the first three months of the year, but hiring has significantly slowed since, according to the Bureau of Labor Statistics. It will release the June jobs data, as well as May revisions, tomorrow morning.

There is this handoff that occurs from the manufacturing cycle, which has so far helped to drive the initial phase of the recovery, to housing, which will propel the economy in the near future.

They go on:

In the recovery so far, beyond personal consumer expenditures, exports and investment – largely the manufacturing cycle – have been significant contributors, while the housing downturn continued to languish. Now, housing growth has returned but the industry is not yet doing the heavy lifting. The much stronger growth in housing is not expected until 2013 and 2014 in our forecast, and most others as well.

But University of Oregon economist Tim Duy writes in his popular blog, Fed Watch, that he’s hesitant to embrace the tradeoff theory, given residential construction’s impact on the economy’s growth. He argues instead that a housing price bubble may continue to hamper growth.

I tend to believe the price-driven balance sheet effects were driving dynamics over this past business cycle. Absent a healing of household balance sheets (or, relatedly, monetary policy that supported such healing via somewhat higher inflation expectations to reduce debt in real terms), I would expect overall growth to remain subdued, despite a rebound in residential construction.